As we go to print with our annual property Guide in early spring, 2020 has arrived with bright, beautiful endless sunshine in the Algarve - surely a good sign for the year to come - and it is no surprise to us that for the 3rd year running, Portugal has received many travel awards. Best Golf Destination 2020 by the International Golf Travel Market, World Travel Awards honoured Portugal with Europe's Leading Beach Destination 2019, Lisbon – Europe's Leading City Break Destination 2019 and for several years now, Portugal has been voted the Best Country to Retire to by International Living - just to mention a few.
So what is going on in the local property market? 2019 was an exceptional year, not only for us but for the whole region. I am sure that most of our colleagues in the property business will agree that there is more demand for property, there is less on the market and vendors are achieving higher prices than ever before.
Even though property values are higher than ever before seen in Portugal, we regularly hear from our international Savills colleagues who are selling comparable properties for vastly higher prices, with a single residential property recently selling for over EUR 200m in the south of France. With Brexit now settled, the Pound on the rise and other nationalities also showing more interest, we feel confident that over the coming months and years, the seemingly unquenchable thirst for a property in the Algarve will continue bringing property values slowly but surely in line with those in other luxury property markets across the globe.
The number of visitors to Portugal is up by 7.3% to 27m in 2019 bringing in an impressive EUR 4.2b in revenue for the country.
The Golden Visa program continues to bring a good number of non-European investors into Portugal, mainly investing in properties between EUR 500k and 750k in the Lisbon area. To date, there have been 8125 permits granted, bringing an incredible EUR 4.9bn into the country!
Here at QP Savills, in 2019 we saw a 67% increase in enquiries, the number of sales increased by 22% and the sales volume increased by 44% to stand at EUR 147m by year-end.
With most of our buyers (85%) still hailing from the UK in 2019, whilst still struggling to find light at the end of the Brexit tunnel, we were delighted to have had such a great year. Our central Algarve market has always seen more demand from British buyers than the eastern and western parts of the region. Most of our colleagues across the coast have historically always had more of an international mix of buyers and to-date they still have a far greater number of French, Dutch and even American snowbirds than we do.
Sun, beach and golf are now complemented with irresistibly attractive tax benefits and buying a property in the Algarve is no longer just for the holidays. Instead, we are seeing a large proportion of our buyers investing in a property and making it their permanent home. This trend has side effects. Buyers will spend more on a permanent home than on a holiday home. Our average, sales price jumped from EUR 1.8m to 2.2m with a few properties even smashing the EUR 10m ceiling. Nothing but the best quality and spec will do and as property values increase due to supply and demand, some buyers who might only have considered the coastal resorts in the past, are now happy to buy inland where prices per square meter are lower and for some, the local life is well suited to permanent living as opposed to the holiday resort lifestyle. New private international schools are opening, large shopping malls, complete with Ikea, are open for business, not to mention the amount of new and diverse health and sports facilities and, of course, the myriad of new restaurants for all tastes.
And to demonstrate this, the Algarve is already joining the glamorous world of branded residences, attracting a whole new group of international buyers. Marriott's exciting W Algarve is due to open in 2021 with a 5-star W Hotel and 95 branded W Residences exclusively for sale by us. Viceroy Hotels and Resorts at Ombria Resort near Loulé is also well on its way with 65 golf side units and offering very attractive guaranteed yields. And in the heart of Quinta do Lago, the Monte da Quinta Suites are now under new management. The building and the suites are being completely refurbished and are now the Wyndham Grand Algarve, also offering great facilities in a prime location and units for sale with guaranteed rental returns.
It is interesting also to see that buyers across all budgets are borrowing more frequently. In years gone by, we would possibly have had a buyer per year who purchased with a mortgage. Today, largely due to low interest rates and less through necessity, we estimate that up to 35% of our buyers are borrowing. As is usual with low interest rates, there is always a positive effect on property markets.
It is important to mention the now more strictly enforced building regulations in Portugal, as these directly affect property prices. As with any commodity, scarcity leads to an increase in value. In the resorts, only a limited percentage of the plot can be built upon, and in the countryside, you can only build on a plot with an existing home or ruin. It is nearly impossible to get plans approved if these conditions are not met. The benefit of these regulations is that this avoids over-building, protecting property values in the long-term – a problem from which other countries have suffered.
Portugal is a topic of conversation now wherever you go. It has come a long way from being (just) the cheap and cheerful summer holiday destination. It is so much more than that and in these often uncertain global times, this sunny, peaceful spot never fails to charm.
If you are considering a purchase in the Algarve, we hope this Guide gives you some insight into the market. For more information, please call us on +351 289 396 073!
QP Savills Market Report – Spring 2020